BoB Brussels branch to offer correspondent banking

Mumbai, Dec 9: Bank of Baroda has joined foreign banks in the battle for the emerging euro business opportunities by offering corresponde...

Mumbai, Dec 9: Bank of Baroda has joined foreign banks in the battle for the emerging euro business opportunities by offering correspondent banking business from its Brussels branch. The bank has equipped its Brussels branch with the latest euro-compliant computer system at a high cost and recruited euro specialist officers to compete with foreign banks in offering correspondent banking services to Indian banks.

A batch of expatriate officers — specialised in the euro business — from its Brussels branch will arrive in India in January to canvas for Indian banks’ accounts. A host of foreign banks led by Chase Manhatten, Deutsche Bank, ABN Amro, Credit Bank and Bank Generale of Belgium and Citibank are at present pitching intensely for Indian banks’ correspondent banking business.

Bank of Baroda is the only Indian bank with a branch in Brussels, the headquarters of the European Monetary Union. The other major Indian bank with a presence in Belgium is the State Bank of India, which is however based inAntwarp, the centre of gems trade dominated by Indians.

"Our Brussels branch puts us in tremendous advantage vis-a-vis others in handling the euro business of Indian banks. We have been there for the last 22 years and are well-grooved into the local business environment. We will provide most of the services that an international correspondent bank can offer," Bank of Baroda deputy general manager, international operations, Balasubramaniam said.

BoB’s Brussels branch is staffed mostly by Europeans, unlike other Indian banks’ branches abroad that are treated as mid-term reward-destination for officers from the domestic cadre. "All the staff has been given special training for handling the euro accounts. They will also visit Indian banks next month to canvass for their euro account," he said.

Bank of Baroda will operate its euro business for Indian banks from five position-maintaining offices in India — Mumbai, Ahmedabad, Delhi, Chennai and Calcutta. All the five will open account with the Brusselsoffice. In addition, these five branches will choose one European bank for the clearing operation. The primary business that BoB is targeting the large volume business of LCs. BoB had been building relationships in Europe for acceptance of its LCs. Some large corporations like Marubeni have begun accepting LCs issued by BoB for sums amounting to $6.5 million.

Corresponding banking relationship on the euro account has taken strategic importance for banks because, once secured, this account will in effect replace scores of correspondent banking relationship that Indian banks at present have to maintain for each of the Europen Union countries. The existing correspondent banking relationships are under threat as newer and bigger banks are claiming the relationship for the whole of EMU territory for lower fee.

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For Indian banks also single correspondent relationship throws up many advantages like a single contract for the entire European Union countries, uniform price and service level for entire EMU, reducedneed for cash-management activities and streamlined back office and nostro-related functions.